Emaar-MGF to get Rs 100 crore govt bailout

March 30, 2009 11:55 IST

The government has decided to provide Rs 100 crore (Rs 1 billion) liquidity support to Emmar-MGF, the developer of the Commonwealth Games village project, as against the developer's demand for Rs 300 crore (Rs 3 billion).

The Ministry of Urban Development plans to ask the Delhi Development Authority (DDA) to buy the flats in the village to provide liquidity to the company. The DDA is expected to sell the flats after the prices revive.

Cash-strapped Emaar-MGF had sought Rs 300 crore (Rs 3 billion) liquidity support from the government as it wasn't able to sell the houses in the project.

"After analysing the project's funding requirements, we have decided that the company should be given Rs 100 crore (Rs 1 billion), against which the DDA will buy some flats. However, the number of flats is still to be decided by our committee as it is working on the issue", said M Ramachandran, secretary, Ministry of Urban Development.

The committee, set up by the Ministry of Urban Development, is analysing the actual price of the apartments. The developer has quoted Rs 12,750 per sq ft.

The market price of flats in the area has fallen by 20-30 per cent and the government would not like to pay an amount higher than the current market price.

Emaar MGF, under a private-public partnership with the DDA, had won the contract to develop 1,168 flats. The company had hoped to sell 70 per cent (778) of these and to use the cash to finance the construction.

The Commonwealth Games Village site is being built to house the 8,500-odd athletes and those who accompany them.

Ramachandran said the project was on schedule, with almost 42 per cent of the work done. The project would be completed by April 2010, a few months before the Games, he added.